January 27, 2022

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Justice Department Requires Divestiture In Order For Liberty Latin America To Acquire AT&T’s Telecommunications Operations In Puerto Rico And The U.S. Virgin Islands

11 min read
<div>The Department of Justice announced today that it is requiring Liberty Latin America Ltd. (Liberty), its subsidiary, Liberty Communications of Puerto Rico LLC (LCPR), and AT&T Inc. (AT&T) to divest certain fiber-based telecommunications assets and customer accounts in Puerto Rico, in order for Liberty to proceed with its proposed acquisition of AT&T’s wireline and wireless telecommunications operations in Puerto Rico and the U.S. Virgin Islands.  The department has approved WorldNet Telecommunications, Inc. (WorldNet) as the acquirer. </div>

Divestiture Will Preserve Competition for Fiber-Based Telecommunications Services for Enterprise Customers in Puerto Rico

The Department of Justice announced today that it is requiring Liberty Latin America Ltd. (Liberty), its subsidiary, Liberty Communications of Puerto Rico LLC (LCPR), and AT&T Inc. (AT&T) to divest certain fiber-based telecommunications assets and customer accounts in Puerto Rico, in order for Liberty to proceed with its proposed acquisition of AT&T’s wireline and wireless telecommunications operations in Puerto Rico and the U.S. Virgin Islands.  The department has approved WorldNet Telecommunications, Inc. (WorldNet) as the acquirer. 

The Justice Department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed merger.  At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the department’s complaint.

“The merger, as originally structured, would have eliminated competition for critical fiber-optic-based telecommunications services that businesses in Puerto Rico rely on every day,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “Today’s settlement will ensure that businesses throughout Puerto Rico continue to benefit from vigorous competition in the provision of these services.”

According to the department’s complaint, Liberty and AT&T are two of the three largest wireline telecommunications providers in Puerto Rico and own two of the three most extensive fiber-based network infrastructures on the island.  Liberty and AT&T each use their extensive network infrastructures to provide fiber-based connectivity and telecommunications services to enterprise customers, including businesses of all sizes as well as institutions, such as universities, hospitals, and government agencies.  The complaint alleges that competition between Liberty and AT&T has resulted in lower prices and higher-quality services for these customers.  According to the complaint, the combination of Liberty and AT&T would leave many customers with only one alternative and others with no competitive choice at all, likely resulting in increased prices and lower-quality services for enterprise customers across Puerto Rico. 

Under the terms of the proposed settlement, Liberty, LCPR, and AT&T must divest certain wireline telecommunications assets and customer accounts in Puerto Rico to WorldNet or to an alternative purchaser approved by the United States.  Specifically, the settlement requires the sale of (a) the fiber-based Columbus network in the metropolitan San Juan area that Liberty acquired as part of its purchase of Cable & Wireless Communications in 2016; (b) additional fiber assets, including fiber facilities and indefeasible rights of use, on Liberty’s network across the rest of the island; (c) retail fiber-based enterprise customer accounts served by Liberty today, with limited exceptions; (d) the right to pull fiber through Liberty’s conduit and attach fiber to Liberty’s telephone poles; and (e) an option to purchase segments of AT&T’s aerial fiber-based core network.  The divestiture will place WorldNet in the position to become a strong competitor in the provision of fiber-based connectivity and telecommunications services to enterprise customers throughout Puerto Rico.

Liberty, a Bermuda corporation with its headquarters in Hamilton, Bermuda, and executive offices in Denver, Colorado, is a leading telecommunications operator in Latin America and the Caribbean.  Liberty provides video services, internet access, and home telephony services to more than 6 million subscribers and mobile wireless services to approximately 3.6 million subscribers across this region.  Liberty generated approximately $3.9 billion in revenues in 2019.

LCPR, a Puerto Rico limited liability company with its headquarters in San Juan, Puerto Rico, is an indirect wholly owned subsidiary of Liberty.  LCPR is the largest cable company and a leading provider of fiber-based connectivity and telecommunications services in Puerto Rico.  LCPR operates more than 3,000 route miles of fiber-optic infrastructure in Puerto Rico and uses this infrastructure to provide fiber-based connectivity and telecommunications services to enterprise customers located throughout the island.

AT&T, a Delaware corporation headquartered in Dallas, Texas, is a leading provider of telecommunications, media, and technology services globally and one of the largest providers of telecommunications services to enterprise customers in the United States.  In Puerto Rico, AT&T provides fiber-based connectivity and telecommunications services to enterprise customers over fiber-optic infrastructure that spans over 3,500 route miles.  AT&T generated approximately $180 billion in revenues in 2019.

WorldNet, a Puerto Rico corporation with its headquarters in Guaynabo, Puerto Rico, is the largest locally owned telecommunications provider in Puerto Rico.  WorldNet provides a range of telecommunications services to enterprise and residential customers on the island.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Scott Scheele, Chief, Telecommunications and Broadband Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 7000, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the final judgment upon finding it is in the public interest.

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